Idaho Small-Business Presentation to the Economic Outlook and - PowerPoint PPT Presentation

Idaho Small-Business Presentation to the Economic Outlook and Revenue Assessment Committee January 5 2018

Celebrating our 75 th anniversary as the Voice of Small Business More than 300,000 dues-paying members nationwide More than 4,300 members in Idaho

 60% of members have 5 or fewer employees  55% of members report gross sales of $350,000 or less  Each member gets one vote on his or her state and federal ballot. No exceptions  To prevent undue influence by any one member group, NFIB dues are capped at a maximum of $10,000

Services, unknown, retail and construction were the leading known industry types among current members. 4

NFIB Idaho Members by Industry

Number of Employing Businesses by Employment Size of Business 4000 3500 3000 2500 2000 1500 1000 (in 000’s) 500 0 0 - 4 5 - 9 10 - 19 20 - 49 50 - 99 100 - 499 500+ Source: Bureau of the Census

Small businesses are NOT smaller versions of big businesses 1. Small businesses pay more per employee in regulatory compliance Small businesses (50 employees or less) face an annual regulatory cost of $11,724 per employee, which is 30 percent higher than the regulatory cost facing large firms (defined as firms with 100 or more employees. 2. Small businesses pay three times as much to comply with taxes “With respect to tax compliance, the cost per employee is three times higher in small firms than in large firms.” –Nicole V. Crain, W. Mark Crain in study for the U.S. Small Business Administration. 3. Personal – not corporate – tax rates are more important to small firms Eighty-five (85) percent of small employers, defined as having more than $100,000 in annual gross receipts, but less than $50 million, are structured as pass-through entities (S corporations, limited liability companies, sole proprietorships or partnerships) that pay taxes on their business income at the individual rate. Most small businesses do not pay the corporate tax. 4. Small business health insurance is more expensive than big business Small business health insurance must cover abundant state-benefit mandates and a federal list of mandated benefits known as the Essential Health Benefits package. 5. The health-care law adds a new tax that targets small businesses Small business health insurance costs have increased by 74 percent over the past decade.

“One organization that knows how to ask small businesses the right questions is the National Federation of Independent Business. As you may know, the NFIB’s monthly Index of Small Business Optimism has been the gold standard for such research for 43 years. They also have a quadrennial report that speaks directly to the “what keeps you up at night” question. It’s the NFIB Small Business Problems and Priorities Survey, and in the 2016 report, you may be shocked to learn that “more sales” came in at #45 out of 75 options. —Jim Blasingame, Jan. 21, 2017

“… [the] largest, longest running data set on small business economic conditions in the world.” --Jerome Katz, Saint Louis University

“We haven’t seen this kind of optimism in 34 years, and we’ve seen it only once in the 44 years that NFIB has been conducting this research. Small business owners are exuberant about the economy, and they are ready to lead the U.S. economy in a period of robust growth.” -- Juanita Duggan, President and CEO of NFIB

“This is the second-highest reading in the 44-year history of the Index. The NFIB indicators clearly anticipate further upticks in economic growth, perhaps pushing up toward four percent GDP growth for the fourth quarter. This is a dramatically different picture than owners presented during the weak 2009-16 recovery. The change in the management team in Washington has dramatically improved expectations.” – NFIB Chief Economist William Dunkelberg

NFIB’s 2018 Forecast for Small Business  The two Index components contributing most to the high Index reading were small-business owners expecting the economy to improve and the number expecting higher real sales.  With the passage of tax reform, which lowered the rates on pass-through businesses, and federal regulatory relief, NFIB is expecting maintained or higher growth for 2018. Small-business owners anticipate a strong first quarter of 2018. Forty-eight percent more small-business owners believe business conditions will improve than get worse in the next six months.  Nationally, more small-business owners have experienced improved sales in 2017 than in 2016 on average. NFIB expects this trend to continue with sales expectations surging in November’s report with more owners bullish on consumer spending in the next three months.  Nationally, job openings are at historically high levels with 30 percent of owners reporting a position they are not able to currently fill. In fact, hiring plans hit a record high with a net 24 percent of owners planning to hire in the next three months.  Nationally, small-business formation rates are declining, making it increasingly important for states to reduce barriers and promote policies supporting small businesses.

“Small-business owners are converting their optimism into action, and a majority cannot find enough workers to meet higher customer demand.” --Juanita Duggan, NFIB President and CEO

“The absence of a major tax is a common factor among many of the top 10 states. Property taxes and unemployment insurance taxes are levied in every state, but there are several states that do without one or more of the major taxes: the corporate income tax, the individual income tax, or the sales tax.”

Other Idaho Rankings For State, For Business Climate 13 Basic Metrics/5 Categories 9  State Cash Solvency  State Budget Solvency  State Long-Run Solvency  State Service-Level Solvency  State Trust Fund Solvency 12/10 15 Variables/2 Rankings  Economic Performance Rank  Economic Outlook Rank 10 Variables/6 Categories  Government Spending  Taxes 66 Metrics/10 Categories  Labor Market Freedom  Workforce  Legal System/Property Rights  Infrastructure  Sound Money  Cost of Doing Business  Freedom to Trade Internationally  Economy  Quality of Life 3*/13*  Technology/Innovation  Education 20  Business Friendliness  Access to Capital  Cost of Living *3 - Tied for 3 rd with 9 other states against 50 U.S. states *13 - Ranking among 50 U.S. states, 32 Mexican states, and 10 Canadian provinces

Thank You Members of the Economic Outlook and Revenue Assessment Committee For giving Main Street, Idaho, Enterprises a Chance to Speak and to help shape their destiny

More NFIB research can be found at www.nfib.com/foundations/research-center and at www.411sbfacts.com where you’ll find issue papers and all of NFIB’s past polls on small-business issues. Follow NFIB on Twitter @NFIB and NFIB Idaho @NFIB_ID www.nfib.com www.nfib.com/idaho